LONDON (Reuters) -- Oil prices fell on Monday as concerns over tight supply were offset by signs of progress in nuclear talks between the United States and Iran, which could lead to the removal of U.S. sanctions on Iranian oil sales.
Brent crude was down 61 cents, or 0.7%, at $92.66 by 1445 GMT, having earlier touched its highest since October 2014 at $94.
U.S. West Texas Intermediate crude fell $1.11, or 1.2%, to $91.20 after touching $92.73.
U.S. President Joe Biden’s administration on Friday restored sanctions waivers to Iran to allow international nuclear cooperation projects as talks on the 2015 international nuclear deal enter the final stretch.
Although the sanctions relief will have limited impact on Iran’s economy, the move was perceived by markets as a signal that both sides are determined to reach a deal.
Iran could quickly export millions of barrels of crude and help to drive down red-hot oil prices if U.S. sanctions are lifted. It seems that Iran has been moving oil into place to prepare for the eventual resumption of its exports.
“An agreement could ultimately result in about 1 million barrels per day (bpd) of crude oil production being reintroduced to the international market in the next 6-9 months, helping to alleviate some of the supply pressure,” said Rystad Energy’s head of oil markets, Bjornar Tonhaugen.
Kazuhiko Saito, chief analyst at Fujitomi Securities, said that “investors expect more twists and turns” in the talks, with no agreement likely any time soon.
Crude prices, which have rallied about 20% this year, are likely to surpass $100 a barrel because of strong global demand, analysts have said.
The Organization of the Petroleum Exporting Countries (OPEC) and allies led by Russia, together known as OPEC+, are struggling to meet output targets despite pressure from top consumers to raise production more quickly.
Fuelling supply concerns, tensions remain high in Eastern Europe, with White House national security adviser Jake Sullivan claiming on Sunday that Russia could invade Ukraine within days or weeks but might still opt for a diplomatic path.